UK grocery sales growth has decelerated, with Asda notably trailing its competitors.
- Recent data indicates a cautious consumer spending pattern, primarily influenced by upcoming festive periods.
- Sales in general merchandise have declined significantly, impacting overall supermarket revenues.
- Noteworthy growth is seen in competitors like Ocado and Lidl, contrasting with Asda’s decline.
- Asda plans strategic investments in store operations to navigate the challenging market.
The UK grocery market has experienced a slowdown in sales growth, which now stands at 4.0% for the four weeks leading up to November 2, compared to a previous 4.7%. This deceleration is largely attributed to consumers exercising caution in their spending as they prepare for upcoming events such as Black Friday and Christmas. According to Mike Watkins from NIQ, shoppers are prioritising savings on essential groceries to manage their expenses on occasional treats.
General merchandise sales have faced a downturn, showing a 1.4% decline in value and a notable 5.5% drop in volume. This trend aligns with findings from Kantar, which support the notion of restrained consumer spending habits in anticipation of major sales events.
Competition in the grocery sector has intensified, with chains like Ocado and Lidl achieving significant growth figures. Ocado reported a 16.1% increase, while Lidl recorded an 11.9% rise over a 12-week period ending November 2. Marks & Spencer also performed well, with an 11.4% growth, contrasting sharply with Asda’s challenges.
Asda’s sales have declined by 3.5%, resulting in a loss of market share by 1 percentage point over the year. This positions Asda behind industry leaders like Tesco and Sainsbury’s, who have both succeeded in increasing their market share, with growth rates of 4.7% and 4.6%, respectively.
To address these challenges, Asda has outlined a £13 million investment intended for enhancing store hours and improving customer service during the busy ‘golden quarter’. This initiative follows leadership changes, with Lord Stuart Rose stepping in to guide the supermarket’s transformation efforts in a competitive climate.
As the festive season approaches, strategic adaptations are crucial for retailers like Asda to regain competitive footing.
